Payday lenders; prohibited from making an unsecured loan, etc., with interest rate in excess of 36%. (HB1709)

Introduced By

Del. Glenn Oder (R-Newport News) with support from co-patrons Del. Phil Hamilton (R-Newport News), Del. John O'Bannon (R-Richmond), and Del. Shannon Valentine (D-Lynchburg)


Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law


Payday lenders prohibited from making open-ended loans. Prohibits any person licensed as a lender under the Payday Loan Act from making an extension of credit under an open-end credit or similar plan. Any loan made in violation of this prohibition will be unenforceable against the borrower. Currently, any seller or lender who extends credit under such a plan may impose finance charges and such other charges and fees at such rates and in such amounts and manner as the parties may agree, if the plan provides a 25-day billing cycle. Read the Bill »


Bill Has Passed


01/05/2009Prefiled and ordered printed; offered 01/14/09 098653668
01/05/2009Referred to Committee on Commerce and Labor
02/05/2009Reported from Commerce and Labor with substitute (19-Y 1-N) (see vote tally)
02/05/2009Committee substitute printed 090177668-H1
02/08/2009Read first time
02/09/2009Read second time
02/09/2009Committee substitute agreed to 090177668-H1
02/09/2009Engrossed by House - committee substitute HB1709H1
02/10/2009Read third time and passed House (97-Y 0-N 1-A)
02/10/2009VOTE: --- PASSAGE (97-Y 0-N 1-A) (see vote tally)
02/11/2009Constitutional reading dispensed
02/11/2009Referred to Committee on Commerce and Labor
02/23/2009Reported from Commerce and Labor with substitute (15-Y 0-N) (see vote tally)
02/23/2009Committee substitute printed 090232324-S1
02/24/2009Constitutional reading dispensed (39-Y 0-N) (see vote tally)
02/25/2009Read third time
02/25/2009Reading of substitute waived
02/25/2009Committee substitute agreed to 090232324-S1
02/25/2009Engrossed by Senate - committee substitute HB1709S1
02/25/2009Passed Senate with substitute (40-Y 0-N) (see vote tally)
02/26/2009Placed on Calendar
02/26/2009Senate substitute agreed to by House 090232324-S1 (96-Y 0-N 1-A)
02/26/2009VOTE: --- ADOPTION (96-Y 0-N 1-A) (see vote tally)
03/09/2009Bill text as passed House and Senate (HB1709ER)
03/10/2009Signed by President
03/11/2009Impact statement from DPB (HB1709ER)
03/11/2009Signed by Speaker
03/30/2009Governor's recommendation received by House
04/07/2009Placed on Calendar
04/08/2009Enacted, Chapter 783 (effective 4/8/09)
04/08/2009House concurred in Governor's recommendation (99-Y 0-N)
04/08/2009VOTE: --- ADOPTION (99-Y 0-N) (see vote tally)
04/08/2009G Emergency clause added by Governor's recommendation
04/08/2009Senate concurred in Governor's recommendation (40-Y 0-N) (see vote tally)
04/08/2009G Governor's recommendation adopted
04/08/2009Reenrolled bill text (HB1709ER2)
04/08/2009Signed by Speaker as reenrolled
04/08/2009Signed by President as reenrolled
04/08/2009Enacted, Chapter 784 (effective 4/8/09)
04/08/2009G Acts of Assembly Chapter text (CHAP0784)
04/14/2009Reenrolled bill text (HB1709ER2)


This bill was discussed on the floor of the General Assembly. Below is all of the video that we have of that discussion, 2 clips in all, totaling 2 minutes.


Virginia Interfaith Center for Public Policy, tracking this bill in Photosynthesis, notes:

The Virginia Interfaith Center is monitoring this bill.

Jim writes:


Get a life and do your job. Let's worry about more important issue's at this present time other than payday lenders, it's an option for people that have no other means. Let's focus on bigger issues here!

Waldo Jaquith writes:

"Get a life" is not at all a useful response to a legislative proposal, Jim. If you think that the legislation is without merit, demonstrate that to be the case. If you can suggest some more useful legislation, do so. As for me, I don't understand this proposal. Since you apparently do, could you explain for me what it accomplishes and why that result is not desirable?

Laura Dely writes:

Hi Jim and Waldo:
This bill closes a loophole that Payday Lenders found in the regulations that were put in place by the legislature last year to prevent the exploitation of low-income people, just as the federal government put in place at and around domestic military bases.
Unary practices such as those of the PayDay Lenders are despicable, and we should not allow them in our society.

Best --
Laura Dely

Nonprofit NoVA, tracking this bill in Photosynthesis, notes:

Support efforts to close loopholes that would weaken the impact and protections of the pay day lending bill enacted last year. Support alternative financing mechanisms and proposals to open up credit to those who are not credit-worthy.

J Hunter writes:

As a commercial lender I do not agree with this bill. Probably not for the reasons you would think. I agree that there should be discussion on rates, however, rates are typically a direct reflection of the cost associated with the money and the risk associated with the borrower. There is a fringe group of borrowers in this country that do not have access to what we consider to be normal avenues of funding (ie - banks and credit cards), either because they do not qualify or because the cost to administer such loans makes it prohibitive for banks to lend.

This industry grew up because of a demand, not because of the supply. What needs to be considered is the individuals who are demanding this product and why they are demanding it, not the individuals who are supplying the product. Anyone that supplies a product should have the right to make a profit. If you attempt to impose arbitrary rules onto an industry you will inevitably kill that industry. That only hurts the individuals seeking the product.

Don't fool yourself, these people are not necessarily being taken advantage of. If that were the case you would see more of the demand side standing up and asking for change, which is not the case. It is typically a bunch of self righteous do gooders that are attempting to "Save" people from themselves that are demanding these changes.

David Wright writes:

I'm not a lender of any kind but I fully agree with J Hunter's comments. These attempts to hurt the payday lending industry and limit the availability of payday loans will only hurt the people who rely on them in a crunch and whose alternatives to entering into such agreements are far worse. The interest rates and terms of these loans are based on market demand. Complaints by the self-righteous anti-payday loan brigade that these lenders have flooded low-income neighborhoods with a loan shop on every corner just further validate that there is a fluid and active market at work which is determining exactly the price and terms at which these loans were offerred. If interest rates become high for people who violate terms and turn them over, that reflects the extrememly high risk the lenders take in offerring the loans- (otherwise the lender on the next block would offer better rates, make more loans, get more money and drive the others out of business- thats how the market works.) Trying to enforce things like rate caps or throwing up these little political roadblocks on where and how the lending agreements can be made is just going to mean that the loans will simply no longer be offerred to the higher-risk borrowers (the ones who need them the most). The entities will only lend when the expected margin of return is greater than the margin of risk.

The so-called community organizers supporting these regulations are basically saying to low-income citizens "hey, you're not smart enough to make lending decisions yourself and we dont trust you to make them, so in order to make sure you're not 'abused' by your own decisions we're going to go ahead and take away your ability to make the choice for yourself." Government at its worst.

frances roehm writes:

I'm wondering why David Wright is so enthused about pay day lenders? Pay day lending is nothing more than legalized usuary. Would'nt it be better to ask why so many Virginia citizens cannot negotiate their financial needs without going to state sanctioned loan sharks? Seems to me that our elected representatives have low expectations of Virginians. They can only attract low wage jobs to this "business friendly" state.